The traditional role for town halls is undergoing a radical shakeup as local authorities are being forced to contemplate a seismic shift in the way they operate in the wake of massive cuts to their budgets.

Perhaps the most outlandish proposal was voted through by councillors at Conservative-controlled Suffolk county council last week. It is to proceed with plans for a "virtual" council that could outsource all public services to social enterprises, the voluntary sector or private companies.

The aim is to turn the authority from one that provides public services itself, to an "enabling" council, which only commissions them. The council hopes that off-loading services could shave 30% off its £1.1bn budget, as part of the government's drive to reduce the fiscal deficit.

Children's centres in the county will be among the first to be jettisoned, probably to social enterprises, alongside a wave of other potential "early adopter" services, ranging from libraries and parks, to youth clubs and independent living centres. The rest will be divested in three phases from April 2011.

Ultimately, only a few hundred people could remain directly employed by the council, primarily in contract management. At present, the local authority employs around 27,000 people, 15,000 of whom work in education, which is set to be taken away from local authority control as the government converts schools to academies and free schools. Many of the remaining 12,000 public servants could face either redundancy or be transferred to a social enterprise or to the private sector.

Although councils have outsourced chunks of their services before, this is the first time a local authority has considered not directly providing any services at all.

"By changing the way council services are delivered, the county council will be able to reduce costs, reduce its size, cut out waste and bureaucracy and give the people of Suffolk a better say on how they receive services," said the statement put out by the council after the vote last week. "In the future, the council will focus more on commissioning services and supporting other organisations, including the voluntary sector, private sector and community groups, to deliver services."

Suffolk is not the only council examining radical measures to address the scale of the cuts that is imminent. According to Tony Travers, director of the Greater London Group at the London School of Economics, cuts estimated to be 25%-30% over five years have prompted a number of authorities to adopt measures that would have been inconceivable before. "What's clearly hugely important in this outbreak of radicalism is the dawning realisation that the light at the end of the tunnel could actually be an oncoming train," he says.

Brighton & Hove city council in East Sussex intends to adopt a similar commissioning model to Suffolk, though it is taking a more nuanced approach. Barnet's "easyCouncil" model in north London would see local authority services run on the no-frills approach of budget airlines, while Lambeth's John Lewis-style approach advocates running services in the south London borough along co-operative lines.

Simon Parker, director at the New Local Government Network thinktank, says: "Some councils are now coming to the conclusion that their role is a democratic, strategic one, determining what's going to be delivered, what the outcomes for citizens should be, but that they shouldn't do the day-to-day heavy lifting themselves." Suffolk's new strategic direction is not only about managing the cuts but also about rushing to embrace the principles of David Cameron's "big society".

"The coalition requires lesser government and a bigger society, and Suffolk county council has responded to this change," Jeremy Pembroke, the leader of Suffolk county council, said last week.

Matthew Taylor, chief executive of the Royal Society for the Arts, which has a number of projects looking at local innovation and the government's big society agenda, believes that Suffolk's new approach may be harder to achieve than Pembroke envisions. "My own view is that, politically speaking, what Suffolk is doing is ill-advised," he says. "In setting out this ambitious vision they're almost certainly setting themselves up to underachieve.

"The danger is that they look as though they're doing this in order to prove a point rather than pragmatically seek to deal with the problems they face."

This could make implementing the plans problematic. Barnet council has recently been criticised by independent auditors for failing to develop a proper business plan for its easyCouncil model more than two years after the project began.

For Taylor, success for Suffolk, therefore, depends on getting the contracts right, and that can be costly. Far from saving money, its virtual council blueprint could end up being more expensive. "We want to avoid reaching the conclusion that on its own contracting out saves lots of money or reduces bureaucracy," he says. "Success is all about the quality of the commissioning process. Probably the biggest weakness of contracting out is the quality of commissioning."

This means the authority will have to hire staff with real expertise in commissioning and managing contracts. "Suffolk needs to invest more in bureaucrats to have good quality commissioning," he stresses.

What the council must avoid, says Parker, is just thinking about how they can reduce costs when commissioning contracts. "Then you'd get cheap and nasty services, instead of trying to get costs down through doing services differently."

Suffolk will find it easier to offload some services than others. Waste, libraries, parks, leisure centres, theatres and back office services are the most obvious candidates. Travers points out that outsourcing will work best where the "downsides of failure are not as cataclysmic for the council and its staff".

But he warns: "The nearer you get to children's services and, to a lesser extent, social care for the elderly, the more councils are going to want to ensure that the agencies and charities to which they hand over services are those they completely trust."

"Going too far towards minimalism is not going to be possible," Travers adds. Even if services are outsourced, the council will still be held accountable for delivery. One consequence of Suffolk's approach will be increased local regulation, he argues.

"Councils will have to become micro-regulators of those providers to ensure it functions properly."

For now, council employees are not only fearful for their jobs but also the quality of local services. Polly Smith is a domiciliary carer, one of around 350 of the council's Home First staff, who provide personal care services to people who have just come out of hospital. The service is set to be one of the first the council transfers. "If it goes to the private sector, what happens if the company goes bust? If this service goes, who's going to look after these vulnerable people?," she asks. "I'm very concerned that vulnerable people will not have as good standards of care."

Rachel Robinson is concerned about the Treehouse children's centre that she uses in south-east Ipswich being run by a social enterprise. Three years ago she started attending the centre which offers a range of services for children and parents, including health clinics, play-and-stay groups and information and advice. Robinson, 38, spent 20 years working for a factories in East Anglia, but three years ago, when her daughter Lily-May was born, the lone mother decided she wanted a career. She says that without Treehouse, she wouldn't have known where to start: "The centre was a lifeline to me."

She emphasises what a big step it was for her walking through the door the first time. "As a single parent on benefits it was a bit daunting going to the centre at first, thinking that people might judge you," Robinson explains. But the experience has been a success. Robinson now runs a toddler group and, with the centre's help, has completed a maths course, has a level 2 qualification in working with parents and hopes to study for a level 3 qualification in childcare at the YMCA. "I'd like to become a family support worker," she says.

For service users such as Robinson, the only hope for the safe future of Treehouse is that an amendment to Suffolk council's plans, requiring much more discussion with local communities, will enable her voice to be heard.

The adopted amendment, proposed by Green party councillors, means that the county council will have to embark on "proactive and wide-ranging engagement" across Suffolk to establish whether its proposals find favour with communities before any services are offloaded. Findings from this process will be reported back at the next full council meeting on 2 December.

Although the council says it wants to target children's centre funding towards the most vulnerable, Robinson says the move would be counter-productive for the future of Treehouse children's centre.

"If they change it, that's going to be very unsettling. If Treehouse goes to a charity, it's going to be a new centre."

She also thinks that services would deteriorate. "If they're cutting back now, what's it going to be like if someone else is running the centre?"